MULLER UK has announced a 1.75 pence per litre cut to its standard milk price to farmers from March 5.

The company – which will pay 24.15ppl from that date – held its price for February but said it had since faced a widening gap between it and prices offered by other processors, including farmer owned co-operatives, which could potentially affect Müller Wiseman’s ability to compete.

However, it said it will continue to pay farmers a leading "clean" price – a figure not eroded by deductions or penalties for balancing, haulage, capital contributions or mechanisms.

Carl Ravenhall, managing director of Müller Wiseman Dairies, said they had to reflect further drops in the value of cream and butter products and the need to be competitive.

He said: “We continue to take very difficult and painful decisions within our company to ensure that our costs are as low as they can be, but our business cannot compete if the cost of the milk that we buy from farmers is substantially higher than that of our competitors."

Roddy Catto, chairman of the Müller Wiseman Milk Group which represents dairy farmers who supply the company, said they had robust discussions with the Müller management team to ensure they were fully aware of trading difficulties faced by dairy farmers in today's extremely trying times.

“As dairy farmers ourselves we do not welcome a further reduction in milk price but the board has worked effectively with Müller to ensure that the standard litre price offered from March remains one of the best available," said Mr Catto.

However, Rob Harrison, NFU dairy board chairman, said the cut was "unacceptable."

He said: "We have seen the farm gate price dropping rapidly over the past nine months which has put many UK dairy farmers in incredibly difficult positions, with many considering their future in the industry. The fact that Muller has said the March price remains 'one of the best available' depicts a dire situation for the dairy sector.

“We can accept that this has been a result of dairy market declines – DairyCo figures clearly show that the cream income to a processor has fallen by 45 per cent since January last year. However, there are now some positive signs on the European market and FrieslandCampina increased its February milk price by €1.25 per 100kg milk and stated that ‘the upward price trend of foil cheeses, milk powders and butter’ will stabilise prices across their reference companies, and New Zealand has reduced its milk production forecast."

Dairy Crest recently announced it was cutting its farmgate milk price by 1.5ppl to 23.09ppl, but would not drop the price further before July.

Mr Harrison said: "Although we are very frustrated by this further price cut, we are pleased that this at least provides some stability to its supplying farmers. We now need other milk buyers to offer similar assurances over the next few months, especially with concerns on the impact of the spring flush on milk prices."